THE government plans to recapitalise and resuscitate Lancashire Steel in a bid to stimulate industrial expansion in the economy, Finance minister Mthuli Ncube has said.
The company ceased operations about a decade ago following the closure of its major raw supplier, the Zimbabwe Iron and Steel Company (Ziscosteel), in 2008.
“Government will continue work with potential investors for the resuscitation of Ziscosteel. In the meantime, a short-term roadmap targeting recapitalisation and resuscitation of the firm’s subsidiaries in the steel industry, particularly Lancashire Steel, is in place,” Ncube said in his 2022 national budget statement.
He added that the revival of Zisco and its affiliates was key to the economy given its potential benefits in job creation and value chain impact in companies such as the National Railways of Zimbabwe (NRZ) and Hwange Colliery Company Limited (Hwange) as well as foreign currency savings from import of steel products.
According to the government, Zimbabwe imports US$1 billion worth of steel annually due to the closure of the state-owned steel maker.
The restart of Ziscosteel, which was seen as key to reviving Zimbabwe’s economy, would also be crucial to the operations of Hwange Colliery and the NRZ, which are both struggling.
Zisco, which was once the largest integrated steel works in the region, closed down in 2008.
The effects of the company’s closure were immediate as a number of businesses had relied on dealings with the country’s biggest foreign currency earner.
The collapse of Zisco distressed NRZ as it was heavily dependent on the steel company.
Hwange used to supply Zisco with large amounts of coking coal daily but since the collapse of the steel producer, it has been struggling, recording a string of losses which management says has dragged it into an appalling net liability position of more than $200 million.
Some industries now import raw materials such as steel billets, which were previously manufactured at the Redcliff-based firm.
Apart from steel billets, local foundries are also reportedly importing ferrosilicon and ferromanganese.
In the face of serious foreign currency shortages in the country, some of the companies that had relied on Zisco have been forced to scale down operations while some have shut down.
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